U.K. Tories to Press Ahead With $16 Billion of Welfare Cuts

Chancellor of the Exchequer George Osborne is seeking to extend spending reductions across government departments as a 2010 effort to rid Britain of its budget deficit by 2015 is pushed back a further two years. Photographer: Oli Scarff/Getty Images

Oct. 8 (Bloomberg) -- The Conservative Party will press
ahead with plans to cut 10 billion pounds ($16 billion) from the
welfare budget and reduce spending by most other departments as
it extends Britain’s austerity program into a seventh year.

The cuts to the benefits budget will go ahead as long as
they meet safeguards sought by Work and Pensions Secretary Iain
Duncan Smith, who has clashed with Chancellor of the Exchequer
George Osborne on the issue since the party came to office in
2010. Duncan Smith and Osborne published a letter today saying
the differences had been resolved.

“We are both satisfied that this is possible and we will
work together to find savings of this scale,” the ministers
said, according to excerpts released by Osborne’s office.

Osborne will address activists at the Conservatives’ annual
conference in Birmingham, central England, later today, seeking
to assure voters that his party will spread the pain of
austerity across society. He’ll accuse the opposition Labour
Party of focusing too much of that effort on the rich.

“There’s unfairness if people listening to this show are
about to go out to work and they look across the street at their
next door neighbour with blinds pulled down, living off a life
on benefits,” Osborne said in an interview with BBC Radio 5
today. “Is it fair that a young person straight from school who
has never worked can find themselves getting housing benefit to
live in a flat when people who are working, perhaps listening to
this program, are still living with their parents” because they
can’t afford to move out, he asked.

Welfare Vision

“I recognize we will have to take more money out of the
welfare system,” he said at an event during the conference.
“But it absolutely has to fit within my vision of helping
people to take control of their lives and improve their lives.
It’s the mark of a humane nation and a developed nation that we
care about people who aren’t able to do the things we do.”

Osborne is seeking to extend spending reductions across
government departments as a 2010 effort to rid Britain of its
budget deficit by 2015 is pushed back a further two years.
Britain spends more than 200 billion pounds a year on welfare,
accounting for 30 percent of total government spending. The
Treasury said in March that welfare cuts of 10 billion pounds
are needed by the fiscal year that runs through March 2017 on
top of the 18 billion pounds of savings already announced.

Attack on Labour

Duncan Smith will next year begin rolling out the Universal
Credit, which consolidates into one payment six of the main
means-tested benefits and tax credits. He and Osborne will say
today that they want to put an end to people spending a lifetime
on welfare.

In his speech, Osborne will say Labour leader Ed Miliband
failed to address in his own conference appearances last week
how the party would cut as much as 16 billion pounds of spending
should they win power after 2015, according to an e-mailed
statement from the chancellor’s office.

Osborne will argue that the rich are paying a greater share
of tax than at any time under the previous Labour government,
even though he scrapped the 50 percent top rate of income tax in
his March budget.

The need to reduce Britain’s debt burden means austerity
will have to be maintained beyond the next election in 2015,
Osborne said in an interview with Sky News in Birmingham today.

“It’s going to go on for some years ahead,” he said.
“It’s going to go on beyond the next election because the debts
we inherited are very great.”

Popular With Voters

While polls show welfare cuts are popular with voters, the
quest for deep savings risks stoking tensions with the
Conservatives’ Liberal Democrat coalition partners. Chief
Secretary to the Treasury Danny Alexander told the Liberal
Democrat conference last month that the party “will not allow
the books to be balanced in a way that hits the poorest
hardest.”

The Independent newspaper quoted Liberal Democrat leader
Nick Clegg as saying in an interview last month that he would
block any saving plans that concentrated on reducing welfare
spending. “That’s totally unacceptable to me,” Clegg was cited
as saying.

Prime Minister David Cameron yesterday pledged additional
measures to increase taxes on the rich, while ruling out a so-called mansion tax on the most expensive homes wanted the
Liberal Democrats, who have linked their support for further
welfare cuts to the introduction of new wealth taxes.

Poll Slump

The Conservatives have lost voter support since cutting the
tax rate for people earning more than 150,000 pounds a year.
Miliband accused Cameron last week of “writing a check to
each and every millionaire in Britain for 40,000 pounds” with
the budget tax cut and argued that Labour is now the party best
able to represent people of all backgrounds and incomes.

Two polls published yesterday showed Labour extending its
lead following its conference. A YouGov Plc survey in the Sunday
Times newspaper found 45 percent of respondents saying they
would vote for Labour, 31 percent favoring the Conservatives and
8 percent backing the Liberal Democrats.

An Opinium poll in the Observer put Labour at 41 percent,
the Conservatives at 30 percent and the Liberal Democrats at 9
percent. YouGov polled 1,782 people Oct. 4 and 5, and Opinium
surveyed 1,965 adults Oct. 2-4.

Separately, Osborne today will say the government will
channel an extra 200 million pounds into scientific research on
condition that it’s matched by universities and private
investors. Under the plan, the total boost to science research
will be 1 billion pounds, the chancellor will say.